Uncertainty hangs over hedge funds

No one expects a wholesale flight from the nearly $2 trillion world of hedge funds, but even a modest outflow could reverberate through the financial markets.

To pay back investors, some funds might be forced to dump investments at a time when the markets already are shaky.

The big worry is that a spate of hurried sales could unleash a vicious circle within the hedge fund industry, with the sales leading to more losses and those losses leading to more withdrawals, and so on.

This is shaping up to be the industry’s worst year on record, with the average fund down nearly 10 percent so far, according to Hedge Fund Research.